Goldwater assails lawsuit threat over Phoenix Coyotes probe

The Goldwater Institute fired back Monday against threats of a Glendale lawsuit, vowing that such litigation against the taxpayer watchdog would be "frivolous and unsuccessful."

Goldwater's Chief Executive Darcy Olsen said in a statement that the group's effort to determine the legality of the city's Phoenix Coyotes deal is in the public interest and protected by the right to free speech.

The Glendale City Council authorized City Attorney Craig Tindall last week to sue Goldwater if he deemed it necessary. The city was expected to claim that the group interfered illegally to block the Coyotes deal. Some media reported the city was expected to file Monday, but it never happened.

Olsen said Goldwater aims to protect taxpayers and ensure government bodies follow the law.

"If this behavior can be subject to a retaliatory lawsuit by a legion of government attorneys," Olsen said, "then journalists, bloggers, and regular citizens across the state are all at risk."

Glendale spokeswoman Julie Frisoni said "we have not moved forward with a lawsuit because we have made every effort to work through this agreement with them (Goldwater)."

Frisoni said the institute "has had every opportunity to engage in public discussion long ago and chose not to," adding that Goldwater attorneys have not come to Glendale meetings that include public comment on the Coyotes.

She said the city has "done nothing ever to inhibit public disclosure."

Olsen argues the city has stonewalled Goldwater by withholding public records on the deal.

For example, shortly after the city held a press conference on Thursday pressuring Goldwater, the city "proceeded to release an additional 750 pages of documents to the Goldwater Institute," Olsen said.

Goldwater has vowed to take the city to court if it determines Glendale is providing a government subsidy to the team.

Frisoni said the deal is on solid ground, noting the city has several legal opinions supporting its deal. Losing the team would be a heavy economic blow to the Valley, she said, estimated at more than half a billion dollars.

The debate should focus on the "substantive issues of this agreement," Frisoni said.

Glendale has called on the institute to declare quickly if it will sue, saying the uncertainty has hampered the city's ability to borrow money to finance its deal with Hulsizer.

Olsen rejected the city's pressure.

"Let me be clear: the Goldwater Institute will not stop this investigation," she said.

The city is trying to complete the financing of an agreement with team buyer Matthew Hulsizer to keep the once-bankrupt Coyotes at Jobing.com Arena. Glendale built the arena in 2003 for $180 million.

Glendale agreed to pay Hulsizer $100 million for the right to charge for parking during arena events, by selling bonds, and $97 million to operate the arena. Hulsizer would keep the team in Glendale until 2041, pay millions in arena rent and other revenues and buy the arena at the end of the lease for $40 million.

Three Valley attorneys contacted by The Arizona Republic on Monday were skeptical Glendale could win a lawsuit against Goldwater.

The city was expected to argue that Goldwater attorney Carrie Ann Sitren tampered with the city's bond sale by sending letters to bond rating agencies and underwriters in January notifying them of the group's potential decision to sue Glendale.

Tom Irvine, a First Amendment attorney for Polsinelli Shughart, said powerful groups like developers and governments often try to use lawsuits, or the threat of them, to silence detractors such as neighborhood groups or advocacy organizations like Goldwater. He helped shepherd through an Arizona law a few years ago restricting such lawsuits.

"If you sue a neighborhood group and put them at risk of the costs of defense and hundreds of millions of dollars in damages, you're hoping they go away and stop debating," he said. "Uniformly courts have been tossing these suits out, finding the First Amendment protects this debate."

He said Goldwater's letters to bond agencies probably did little to hamper Glendale's deal, as media coverage of the institute's opposition was widespread.

If Glendale wants to assure Goldwater doesn't sue, the city could go to court seeking a declaratory judgment, or a ruling stating that the city's deal is not a subsidy in violation of the Arizona constitution, Irvine said. He pointed to San Diego using a similar approach to gain court permission to build a baseball stadium.

Bill Hicks, bond counsel at Ballard Spahr, said it's unusual for an entity like Goldwater to write to a bond agency.

"In my 40 years in the business, I've probably heard of that three or four times," he said, such as when a banker wrote anonymously to ratings agencies hoping to torpedo a competitor.

Hicks said Goldwater's aim in writing letters may have been to stop the city's bond issue without suing Glendale, in an effort to avoid the cost of litigation or the rigor of proving their case.

But he said such letters typically don't change much, since agencies and the U.S. Securities and Exchange Commission do their own research.

Hicks said Glendale might be able to sue for market disparagement, or bad-mouthing the city.

Business attorney Barry Halpern, of Snell & Wilmer, said it would be difficult to prove Goldwater sent the letters with a malicious intent to disparage the city. He said Goldwater likely would be protected by the First Amendment.